Big Housing doles out the cash to Cochran and others

Republican U.S. Senator Thad Cochran raises his arm with a supporter during an election night celebration after defeating Tea Party challenger Chris McDaniel in a run-off election in Jackson, Mississippi June 24, 2014. The National Association of Realtors provided financial support to Cochran.

WASHINGTON (MarketWatch) — The housing market is in better shape than it was two years ago, but major issues are still in flux, and industry participants are placing large bets on favored congressional candidates ahead of the November election.

Housing groups have already spent millions of dollars this election season, and check-writing is sure to ramp up over coming months. Given the partisan gridlock in Congress, one might wonder why the industry would bother to invest so much in lawmakers who may accomplish very little. The answer is simple: advocates must use every opportunity to promote their position.

“A trade group representing an industry cannot be caught on the sidelines and unprepared,” said Brian Gardner, an analyst at Keefe, Bruyette & Woods, a New York-based investment bank. “Groups and advocates want to be proactive and always try to build political capital, even when the prospects of legislation are low.”

The major looming political issue for the housing industry is mortgage-finance reform, including what to do with federally controlled giants Fannie Mae
FNMA, -4.28%
and Freddie Mac
FMCC, -4.26%
which back about six-in-10 new mortgages. Much of the housing industry wants Congress to retain some place for the government in the mortgage marketplace, while encouraging greater private investment. Other priorities for the housing industry are whether tax reform will hit the mortgage-interest deduction, terrorism-risk insurance, flood insurance, immigration, and other issues.

The housing market as a whole is at the point where the worst of the crisis has passed. Foreclosures are dropping, home equity is rising and job growth, a key factor behind home sales, is firming.

“Fewer people are at risk of losing their homes,” said Jed Kolko, chief economist at real estate site Trulia.

Still, years after the bubble burst, Washington remains waist deep in unresolved issues affecting the housing market, and industry advocates are paying close attention to action on Capitol Hill.

“Our members are just as interested as any of the other stakeholders in the housing market’s recovery, concerned about creating a favorable business environment for them to offer sustainable mortgage credit to consumers,” said Bill Killmer, chief lobbyist at the Mortgage Bankers Association. “We need to be involved with folks that have the capacity to influence the debate.”

The market’s rebound may be cutting the urgency among lawmakers to move faster on, for example, ending the federal conservatorship of government sponsored enterprises Fannie and Freddie – a relationship originally intended to be temporary, but that is now approaching its six-year birthday. A bill that would wind down Fannie and Freddie and create a federal emergency backstop for mortgage-backed securities is stalled in the Senate, having passed in a committee with too little support to force a floor vote anytime soon. A Republican proposal in the House would create no such government guarantee.

Housing industry’s major outlays

The National Association of Realtors has already contributed more than $1.4 million to federal candidates, about 48% to Democrats and 52% to Republicans, according to OpenSecrets.org, a site that follows money in politics.

“Housing and real estate issues are pretty much in the middle of the political spectrum. Our friends are in both parties,” said Jamie Gregory, NAR’s deputy chief lobbyist.

Its sizable political contributions make NAR a “heavy hitter,” according to OpenSecrets.

“We are in the business of electing people to Congress that support housing and real estate,” Gregory said. ”It’s people that stand up and are advocates. We get involved with those kinds of activities where we can make a difference and we do it where our friends need the help. We don’t just do it to sort of wave a flag.”

NAR also focuses on developing relationships over time, rather than just looking at single issues. Sen. Thad Cochran, a Republican of Mississippi who won Tuesday’s runoff, is a large beneficiary of NAR’s “outside” spending — expenditures made independently of a candidate’s committees — with the Realtor group investing more than $780,000 in support of his candidacy. Cochran, a senior member in his chamber, is also on the Senate Appropriations Committee, a powerful panel that oversees spending.

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